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Rotting Apple Thesis Still Intact

GoogleGoogle has won the race to $1,000, one which AppleApple was tipped to win back in 2012. It is certainly a counter argument to the efficient market hypothesis that anyone should care about these round number milestones.

Nonetheless, Google smashing through that ceiling has made global headlines—and Google does have the bull and the world by the horns.

Whereas great companies of the past have cowered before regulators and governments, from Standard Oil through to MicrosoftMicrosoft, Google is the first corporation to tell whole countries to deal with Google on its own terms.

It is impressive, but after all that, Google at $1,000 a share is still only 75% of the market cap of Apple. But while Google is still far off Apple’s market cap by a chunk, its sales are a mere third of Apple and its last annual profit 25%. In a nutshell, Google’s P/E is nearly two and a half times Apple.

The argument for such disparity is that Google is an unassailable monopoly while Apple is a vulnerable maker of electronic-fashion items. However, Apple is still the more valuable company.

Clearly Apple isn’t the go-go stock it used to be, so what now? Well, this is what I last wrote, saying Apple was going to follow the path of Microsoft in its post bubble life: Both were founded and run by a genius, both became the giants of their eras, titans of the stock market and both had their moment of glory. But both lost their key person, replaced by a great businessman but someone not capable of the huge achievements of the previous incumbent.

I also said that Apple investors need to look at the Microsoft chart carefully because this is a highly likely future for their stock.

This is where we are now:

So we are still very much in line with this prediction.

However, circumstances change and it is always the case that others will have a better insight than you as an outsider can possibly get, and as such the stock chart will tip you off if in the deep foreground bad things are happening.

The following trend prediction is what holders need to keep an eye out for. If this starts to develop consider the thesis that Apple is on its way back to normality:

The bulls want to see this chart:

If the post debt ceiling brings the market to euphoria and the new iPads are amazing, it might happen however, I can’t see it myself.

The new blue eyed boy of the market is Tesla (see Tesla Is The New Bubble Stock), so the kind of speculators that levitated Apple to $700 are now looking to Elon Musk and away from Infinite Loop for their dreams.

In the bi-polar U.S. stock market a share can go from hero to zero very fast as any holder in Blackberry will tell you. NokiaNokia with its great Lumina product sold to Microsoft for a third of sales. At that ratio Apple would be worth less than $100 a share.

Blackberry and Nokia underline the downside for Apple. Both Nokia and Blackberry are fallen titans; who would have thought they would be so quickly consigned to the history books. However, Apple is likely to muddle on, riding on the back of its vast momentum and monopoly ecosystems.

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